Exhibit 10.1


 


HADDRILL EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT, made and entered into as of this 30 day of June, 2004, by
and between Alliance Gaming Corporation, a Nevada corporation with its
principal place of business at 6601 South Bermuda Road, Las Vegas, Nevada  89119  (the
“Company”), and Richard Haddrill, currently residing at 3394 Knollwood Drive,
Atlanta, Georgia 30305 (“Haddrill”).


 


BACKGROUND


 


Haddrill has
significant gaming industry experience and currently serves as a member of the
Board of Directors of the Company (the “Board of Directors”).


 


The Company
desires to avail itself on a full-time basis of Haddrill’s expertise and to
employ him as the Chief Executive Officer (“CEO”) of the Company to enable him
to contribute, on a full-time basis, to the growth and success of the Company.


 


Haddrill is
willing to commit himself to be so employed by the Company.


 


NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein, and each intending to be legally bound hereby, the parties agree as
follows:


 


1.                                       Employment.  Subject to the terms of this Agreement, the
Company hereby employs Haddrill and Haddrill accepts such employment.


 


2.                                       Position and
Duties of Haddrill.


 


(a)                                  Haddrill
shall serve as CEO of the Company.  In
such capacity, Haddrill will have such powers and perform such duties as are
contemplated by such title and as are appropriate to the management of all
aspects of the Company’s business and such other duties consistent with his
title as may be assigned, from time to time, by the Board of Directors.  Haddrill will report directly and be subject
to the Board of Directors, and will continue to be nominated to serve as a
member of the Board of Directors during the term of this Agreement.


 


(b)                                 (i)
Haddrill will devote his full business time and effort to the business and
affairs of the Company and shall perform his duties hereunder faithfully,
diligently and to the best of his ability. 
Haddrill shall not engage in any outside for-profit business, employment
or commercial activities, except that Haddrill may serve on the board of
directors of no more than two (2) non-affiliate for-profit entities, including
employment as Vice Chairman of Manhattan Associates, Inc., which will include
some transition duties through January 1, 2005, so long as such service and
Haddrill’s service on behalf of any not-for-profit organizations does not
materially affect Haddrill’s ability to perform his duties as the Company’s
CEO.


 


(ii) The
provisions of this paragraph 2 shall not prevent Haddrill from investing his
assets in such form and manner as he chooses; provided, however, that Haddrill
shall not have any personal interest, direct or indirect (other than through
the Company or its subsidiaries or as part of a broadly diversified mutual fund
or managed account not directed by


 

















 


Haddrill), financial or otherwise, in any
supplier to, buyer from, or competitor of the Company, unless such interest has
been approved by the Compensation Committee.


 


(c)                                  Commencing
on the Commencement Date, as hereinafter defined, Haddrill shall render
services to the Company from the Company’s principal place of business, Las
Vegas, Nevada; however, the parties acknowledge and agree that Haddrill may be
required to travel extensively in fulfilling his duties hereunder.  The Company shall provide Haddrill with an
appropriate office in Las Vegas, Nevada and reasonable secretarial personnel of
his choosing.


 


3.                                       Term.  The term of this Agreement will commence on
a mutually agreeable date (the “Commencement Date”), which shall not be later
than October 1, 2004.  This Agreement will terminate on the day immediately
following the third anniversary date of the Commencement Date, unless otherwise
terminated as provided herein or renewed as mutually agreed between the parties.


 


4.                                       Compensation.  The Company shall pay Haddrill, and Haddrill
shall accept from the Company, in full payment for Haddrill’s services as CEO,
compensation consisting of the following:


 


(a)                                  Base
Salary.  A base salary of $980,000
per year, payable in accordance with the Company’s customary payroll practices.


 


(b)                                 Company
Benefits.  The standard benefits the
Company makes available to its similarly situated senior executives, including,
but not limited to, 401(k) Plan participation, medical and hospital and
disability benefits and four weeks of paid vacation time each year, plus
holidays.


 


(c)                                  Club
Initiation Fee.  Payment of the
initiation fee (but not annual dues) to the golf or country club of Haddrill’s
choice, in the Las Vegas, Nevada, area, subject to approval by the Board of
Directors.


 


(d)                                 Stock
Options.  As of the date of this
Agreement, Haddrill shall be granted a nonstatutory stock option grant under
the Company’s 2001 Long Term Incentive Plan (“the Plan”) to purchase 500,000
shares of the Company’s common stock (“Options”), exercisable at a price and
for a period of time and on such other terms as are set forth in Schedule A
hereto.


 


(e)                                  Restricted
Stock Grant.  As of the date of this
Agreement, Haddrill shall receive a grant of restricted stock units under the
Plan (“Restricted Stock Units”), representing the value of $6.5 million of
common stock of the Company calculated in accordance with Schedule B
hereto.  The Restricted Stock Units
shall vest and be subject to the terms and conditions set forth on Schedule B
hereto.


 


(f)                                    During
the term of this Agreement, Haddrill shall not be entitled to receive any
additional compensation as a Director.


 


5.                                       Business and
other Expenses.  The Company shall
reimburse Haddrill for reasonable business expenses (including first-class
commercial air travel, as appropriate) in accordance with the Company’s
business expense policy.  The Company
shall also pay directly


 


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the legal expenses that Haddrill incurs in connection with the
negotiation and preparation of this Agreement, up to a maximum of $15,000.


 


6.                                       Relocation
Expenses.


 


(a)                                  Haddrill
and his family shall be residents of the Las Vegas, Nevada area on the
Commencement Date.  The Company shall
reimburse Haddrill for the costs associated with his relocation from Atlanta,
Georgia to the Las Vegas, Nevada area (such costs, collectively, “Relocation
Costs”), including, but not limited to, reasonable moving costs, up to 3 trips
to Las Vegas to select a new house, closing costs, brokerage commissions and
legal fees, and, if appropriate, temporary housing in Las Vegas for a
reasonable period of time (up to 30 days following the Commencement Date),
subject to review and approval of the Board of Directors.  There shall be added to the amount of the
Relocation Costs an additional amount such that the total payment to Haddrill
pursuant to this paragraph 6(a) is equal to the amount of the Relocation Costs
divided by the amount that is equal to 1 minus the highest Federal tax rate
then in effect.


 


(b)                                 Promptly
after the execution of this Agreement, the Company will, at its expense (the
“Appraisal Cost”), engage a recognized independent appraiser reasonably
satisfactory to Haddrill to perform an appraisal of Haddrill’s primary
residence in Atlanta, Georgia (“Property”). 
In the event that, during the three year period commencing on the
Commencement Date and ending on June 30, 2007, Haddrill sells the Property and
realizes an amount net of expenses less than the amount of the appraised value
of the Property, the Company shall pay to Haddrill the difference, up to
$150,000, between the amount realized for the sale of the Property and the
amount of the appraised value of the Property (any such payment, together with
the Appraisal Cost, the “Appraisal Payment”). 
There shall be added to the amount of the Appraisal Payment an
additional amount such that the total payment to Haddrill pursuant to this
paragraph 6(b) is equal to the amount of the Appraisal Payment divided by the amount
that is equal to 1 minus the highest Federal tax rate then in effect.


 


(c)                                  In
the event that, at any time during the three year period commencing on the
Commencement Date and ending on June 30, 2007, Haddrill determines not to
dispose of the Property (the “Determination Date”) the Company will, promptly
after the Determination Date, pay to Haddrill an amount representing solely the
expenses that he would have incurred had he sold the Property, including, but
not limited to, estimated closing costs and brokerage commissions assuming a
sale price equal to the appraised value, and estimated legal fees (such
expenses, collectively, the “Selling Expenses”).  There shall be added to the amount of the Selling Expenses an
additional amount such that the total payment to Haddrill pursuant to this
paragraph 6(c) is equal to the amount of the Selling Expenses divided by the
amount that is equal to 1 minus the highest Federal tax rate then in effect.


 


7.                                       Termination.  Haddrill’s employment may be terminated at
any time before the end of the term of this Agreement as follows:


 


(a)                                  By
the Company for cause, which shall include but not be limited to an act or acts
or an omission to act by Haddrill involving: 
(i) willful and continual failure to substantially perform his duties
with the Company (other than a failure resulting from Haddrill’s


 


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incapacity due to physical or mental illness) and such failure
continues for a period of thirty (30) days after Haddrill’s receipt of written
notice from the Company providing a reasonable description of the basis for the
determination that Haddrill has failed to perform his duties; (ii) conviction
of a felony other than a conviction not disclosable under the federal
securities laws; (iii) breach of this Agreement in any material respect and
such breach is not susceptible to remedy or cure or has already materially
damaged the Company, or such breach is susceptible to remedy or cure and no
such damage has occurred and such breach is not cured or remedied reasonably
promptly after Haddrill’s receipt of written notice from the Company providing
a reasonable description of the breach; (iv) Haddrill’s failure to qualify (or
having so qualified being thereafter disqualified) under a suitability or
licensing requirement of any jurisdiction or regulatory authority that is
material to the Company and to which Haddrill may be subject by reason of his
position with the Company and its affiliates or subsidiaries; (v) the Company
obtains from any source information with respect to Haddrill or this Agreement
that could reasonably be expected, in the reasonable written opinion of both
the Company and its outside counsel, to jeopardize the gaming licenses,
permits, or status of the Company or any of its subsidiaries or affiliates with
any gaming commission, board, or similar regulatory or law enforcement
authority; or (vi) conduct to the material detriment of the Company that is
dishonest, fraudulent, unlawful or grossly negligent or which is not in compliance
with the Company’s Code of Conduct or similar applicable set of standards or
conduct and business practices set forth in writing and provided to Haddrill
prior to such conduct and which has a material detriment to the Company and is
not susceptible to remedy or cure by Haddrill.


 


(b)                                 By
the Company for other than cause.


 


(c)                                  By
Haddrill for “Good Cause”, which shall mean the occurrence of any one or more
of the following events without the consent of Haddrill:


 


(i) the
assignment to Haddrill of any duties materially inconsistent with his duties
and position as set forth in this Agreement (including, without limitation,
status, titles and reporting requirements), or any other action by the Company
that results in a material diminution in such duties or position, excluding for
this purpose isolated and inadvertent action not taken in bad faith and
remedied by the Company promptly after receipt of notice thereof given by
Haddrill;


 


(ii) a
reduction by the Company in Haddrill’s base salary or participation in any
other compensation plan, program, arrangement or benefit below that to which
Haddrill is entitled hereunder;


 


(iii) the
Company’s requiring Haddrill to be based anywhere other than the Las Vegas,
Nevada area, except for reasonably required travel on business of the Company;
or


 


(iv) any material breach by the Company of any
provision of this Agreement and such breach continues for a period of thirty
(30) days after the Company’s receipt of written notice from Haddrill providing
a reasonable description of the material breach claimed by Haddrill.


 


(d)                                 By
Haddrill for other than Good Cause.


 


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(e)                                  On
the date of Haddrill’s death, should Haddrill die before the end of the term of
this Agreement.


 


(f)                                    Upon
the disability or incapacitation of Haddrill, which shall mean Haddrill’s
failure to discharge his duties under this Agreement for six or more
consecutive months or for non-continuous periods aggregating to twenty-two
weeks in any twelve-month period as a result of illness or incapacity.


 


In all cases
of termination and upon the expiration of this Agreement, unless otherwise
agreed to, Haddrill shall be deemed to have contemporaneously resigned from his
position as a member of the Board of Directors, effective as of the date of
termination or expiration. 
Notwithstanding the foregoing, Haddrill’s resignation from the Board of
Directors, for purposes of that certain Stock Option Agreement between Haddrill
and the Company dated January 8, 2004, pursuant to which Haddrill has been
granted an option to acquire 195,000 shares of the Company’s common stock,
shall be deemed to have been at the request of the Board of Directors as
provided in paragraph 4(c)(iv) of such Stock Option Agreement, and such
resignation shall not otherwise adversely affect any other options to purchase
shares of the Company’s common stock granted to Haddrill solely in his capacity
as a Director of the Company; so long as, in all cases, that Haddrill’s
termination is a result of his having been terminated pursuant to paragraphs
7(b) or 7(c), (e) and (f) hereof, or is a result of the expiration of this
Agreement.


 


8.                                       Payments Upon
Termination or Change of Control.


 


(a)                                  If
Haddrill’s employment is terminated under paragraph 7(a) or 7(d) hereof, (i)
the Company shall have no further obligation under this Agreement, except the
obligation to pay Haddrill an amount equal to the portion of his compensation
and out-of-pocket business expenses as may be accrued and unpaid on the date of
termination and (ii) Haddrill shall be entitled to retain [a] that number of
Restricted Stock Units that have vested through the date of termination in
accordance with the vesting schedule set forth on Schedule B hereof and [b]
that number of Options that have vested in accordance with the vesting schedule
set forth in Schedule A hereof.  All
non-vested Restricted Stock Units and Options shall be immediately forfeited.


 


(b)                                 If
Haddrill’s employment is terminated under paragraphs 7(b) or 7(c) hereof, (i)
the Company shall [a] pay Haddrill an amount equal to the portion of his
compensation and out-of-pocket business expenses as may be accrued and unpaid
on the date of termination; [b] pay Haddrill severance pay in an amount equal
to the base salary for a period of one year from the date of termination or
until the expiration of this Agreement, whichever first occurs; and (ii)
Haddrill shall be entitled to retain [a] the Restricted Stock Units to the
extent provided in Schedule B hereof, provided that the Restricted Stock Units
shall be pro rated through the 12-month period following the month in which the
date of termination occurs (i.e., the number of Restricted Stock Units to which
Haddrill shall be entitled shall be equal to the aggregate of all Restricted
Stock Units multiplied by a fraction, the numerator of which shall be the
number of partial or whole months served by Haddrill under this Agreement from
and after the Commencement Date plus 12, and the denominator of which shall be
36), and [b] all Options in which price targets have been achieved at the date
of termination regardless of the time


 


5

















 


vesting requirement and all other time vesting options with respect to
which the price targets have not been achieved (“Time Vested Options”) shall be
pro rated through the month in which the date of termination occurs; provided
that the Time Vested Options shall be exercisable only to the extent the price
targets are achieved within the time periods specified on Schedule A attached
hereto.  Except as provided herein, all
non-vested Restricted Stock Units and Options shall be immediately forfeited.


 


(c)                                  If
Haddrill’s employment is terminated under paragraph 7(e) or 7(f), (i) the
Company shall [a] pay to Haddrill or Haddrill’s Estate, as the case may be, an
amount equal to the portion of his compensation and out-of-pocket business
expenses as may be accrued and unpaid as of the date of his termination; and
[b] pay Haddrill or Haddrill’s Estate the base salary for a period of one year
from the date of Haddrill’s termination of employment or until expiration of
the term of this Agreement, whichever occurs first; and (ii) Haddrill or
Haddrill’s Estate shall be entitled to retain [a] that number of Restricted
Stock Units that have vested through the date of termination in accordance with
the vesting schedule set forth on Schedule B hereof and [b] the number of
Options that have vested at the date of termination in accordance with the
vesting schedule set forth in Schedule A hereof.  All non-vested Restricted Stock Units and Options shall be
immediately forfeited.


 


(d)                                 (i)
Upon a Change of Control, as hereinafter defined, [a] the Company shall pay to
Haddrill $980,000, and [b] Haddrill shall be entitled to retain [1] all of the
Restricted Stock Units granted to him irrespective of the vesting schedule set
forth on Schedule B hereof and [2] all of the Options granted to him
irrespective of the vesting schedule set forth in Schedule A hereof, and all
such Restricted Stock Units and Options shall vest immediately. 
Notwithstanding paragraphs 8(a) through (c), upon a Change of Control
the Company shall have no further obligations under this Agreement other than
as set forth in this paragraph 8(d). 
For purposes of this paragraph 8(d), “Change of Control” shall mean (i)
the acquisition, directly or indirectly, by any unaffiliated person, entity or
group (a “Third Party”) of beneficial ownership of more than 50% of the
combined voting power of the Company’s then outstanding voting securities entitled
to vote generally in the election of directors; (ii) consummation of (1) a
reorganization, merger or consolidation of the Company, or (2) a liquidation or
dissolution of the Company or (3) a sale of all or substantially all of the
assets of the Company (whether such assets are held directly or indirectly) to
a Third Party; or (iii) the
individuals who as of the date of this Agreement are members of the Board of
Directors (together with any directors elected or nominated by a majority of
such individuals) cease for any reason to constitute at least a majority of the
members of the Board of Directors; except that any event or transaction
which would be a “Change of Control” under (i) or (ii) (1) of this definition,
shall not be a Change of Control if persons who were the equity holders of the
Company immediately prior to such event or transaction (other than the acquiror
in the case of a reorganization, merger or consolidation), immediately
thereafter, beneficially own more than 50% of the combined voting power of the
Company’s or the reorganized, merged or consolidated company’s then outstanding
voting securities entitled to vote generally in the election of directors.


 


(ii)
Notwithstanding anything in this Agreement to the contrary, in the event that
any payment or distribution by the Company, or any acceleration or waiver of
any vesting condition or requirement, to or for the benefit of Haddrill,
whether paid or payable or distributed or distributable, or otherwise effected,
pursuant to the terms of this Agreement or


 


6

















 


otherwise (a “Payment”), is subject to the excise tax imposed by I.R.C.
§ 4999,
or any successor provision, or any interest or penalties are incurred by
Haddrill with respect to such excise tax (such excise tax, together with any
such interest and penalties, collectively, the “Excise Tax”), then Haddrill
shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by Haddrill of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Haddrill
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.


 


(e)                                  The
payment to Haddrill of any amounts pursuant to this paragraph 8 shall be
conditioned upon the execution by Haddrill and the Company of a mutual release
agreement providing for the release of all claims against the Company and
Haddrill, respectively, except for claims arising under or in connection with
such mutual release agreement.


 


9.                                       Purchase of
Company Stock.  Prior to the
Commencement Date, Haddrill shall, subject to the Company’s policies relating
to the purchase of shares of the Company’s common stock by persons deemed to be
Insiders, increase his holdings of shares of the Company’s common stock (such
holdings of shares, the “Alliance Stock”) to a point at which, as of the
Commencement Date, such holdings have an aggregate acquisition cost to Haddrill
of at least $1.0 million.  Subject to
his compliance with applicable State and Federal securities laws, Haddrill
shall be entitled to sell the Alliance Stock commencing on the earlier of (i)
three years from the Commencement Date, or (ii) the day after he is no longer
employed as CEO of the Company under this Agreement.


 


10.                                 Trade Secrets and
Confidential Information.  Haddrill
shall not, directly or indirectly, disclose or use at any time either during or
after employment by the Company, any Confidential Information (as hereinafter
defined) of which he becomes aware, whether or not any such information is
developed by him, except to the extent such disclosure is required in the
performance of the duties assigned to him by the Board of Directors.  Haddrill shall follow all procedures
established by the Company to safeguard Confidential Information and to protect
it against disclosure, misuse, espionage, loss or theft.


 


(a)                                  “Confidential
Information” shall mean information that is not generally known to the public,
which is used, developed or obtained by the Company and/or any of its
affiliates, relating to its or their business and the businesses of its or
their clients, vendors or customers including, but not limited to: business and
marketing strategies, products or services; fees, costs and pricing structure;
marketing information; advertising and pricing strategies; analyses; reports;
computer software, including operating systems, applications and program
listings; flow charts; manuals and documentation; data bases; accounting and
business methods; hardware design; technology, inventions and new development
and methods, whether patentable or unpatentable and whether or not reduced to
practice; all copyrightable works; the Company’s or any of its affiliates’
existing and prospective clients, customers, and vendor lists and other data
related thereto; all trade secret information protected by the federal Economic
Espionage Act of 1996, 18 U.S.C. §
1831 et seq.; and all similar and related information in whatever form.


 


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(b)                                 “Confidential
Information” shall not include any information that has been published in a
form generally available to the public prior to the date upon which Haddrill
proposes to disclose such information. 
Information shall not be deemed to have been published merely because
individual portions of the information have been separately published, but only
if all the material features comprising such information have been published in
combination.


 


11.                                 Creative Works and
Other Property.


 


(a)                                  Haddrill
will promptly disclose to the Company all inventions, concepts, processes,
improvements, methodologies and other creative works, whether or not they can
be patented or copyrighted (collectively “Creative Works”) that during his
employment were or were caused to be conceived or developed by him, either
solely or jointly with others, relating to the Company’s business or to the
business of any affiliate of the Company and Haddrill agrees that all such
Creative Works shall be the sole property of the Company.  Upon the request of the Company, Haddrill
will at any time (whether during his employment or after its termination for
any reason) assist the Company and fully cooperate with it to protect the
Company’s interest in such Creative Works and to obtain, for the Company’s
benefit, patents or copyrights for any and all Creative Works in the United
States and in any and all foreign countries. 
This paragraph does not apply to any Creative Work that Haddrill
develops entirely on his own time and for which no equipment, supplies,
facility or Confidential Information of the Company was used unless:
(i) the Creative Work relates to the Company’s business or to the business
of an affiliate of the Company or to the actual or anticipated research or
development activities of the Company or any of its affiliates; or
(ii) the Creative Work results from any work Haddrill performs for the
Company.


 


(b)                                 Upon
the termination of Haddrill’s employment for the Company, Haddrill shall
immediately, and without request, deliver to the Company all copies and
embodiments, in whatever form, of all Confidential Information and all other
documents, materials or property belonging to the Company even if they do not
contain Confidential Information, including but not limited to: written
records, notes, photographs, manuals, computers, notebooks, reports, keys,
documentation, flow charts and all magnetic media such as tapes, disk or
diskettes, whichever located, and, if requested by the Company, shall provide
the Company with written confirmation that all such materials have been
returned.  Haddrill has no claim or
right to the continued use, possession or custody of such information,
documents, materials or property following the termination of his employment
with the Company.


 


12.                                 Covenants Not to
Compete.


 


(a)                                  During
his employment under this Agreement and for a period of two (2) years following
the termination of this Agreement for whatever reason, Haddrill shall not
become employed by, act as a consultant for, contract with, obtain a beneficial
ownership interest in or otherwise enter into any form of business relationship
with International Game Technology, Inc., WMS Industries, Inc., Shuffle Master,
Inc., Aristocrat Leisure, Ltd., Gtech Holdings Corp., Multimedia Games, Inc. or
Sigma Game Inc., or any of their present and future affiliates, subsidiaries,
divisions, parent companies and successors.


 


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(b)                                 During
his employment under this Agreement and for a period of one (1) year following
the termination of this Agreement for whatever reason, Haddrill shall not
become employed by, act as a consultant for, contract with, obtain a beneficial
ownership interest in or otherwise enter into any form of business relationship
with any person, firm, company, corporation, partnership, association or other
organization within the United States that is not listed in paragraph 12(a) but
that is otherwise engaged in the gaming business.


 


13.                                 Covenants Not to
Solicit.  During his employment
under this Agreement and for a period of two (2) years following the
termination of this Agreement for whatever reason, Haddrill agrees that, unless
he obtains written approval in advance from the Board of Directors, he shall
not in any way, directly or indirectly,


 


(a)                                  contact,
employ, solicit, hire or attempt to persuade any employee, agent or independent
contractor of the Company or any of its affiliates, or any who served in such
capacities within one (1) year of the termination of Haddrill’s employment, to
terminate his, her or its relationship with the Company and/or its affiliates
or do any act that may result in the impairment of the relationship between the
Company or any of its affiliates on the one hand and the employees, agents or
independent contractors of the Company or any of its affiliates on the other
hand; or


 


(b)                                 contact,
solicit, engage, contract with, any customer or supplier of the Company or any
of its affiliates or do any act that may result in the impairment of the
relationship between the Company or any of its affiliates on the one hand and
the customers and suppliers of the Company or any of its affiliates on the
other hand.


 


14.                                 Reasonableness of
Restrictions.  Haddrill agrees and
acknowledges that the type and scope of restrictions described in paragraphs
10, 11, 12 or 13 are fair and reasonable and that the restrictions are intended
to protect the legitimate interests of the Company and not to prevent him from
earning a living.  Haddrill recognizes
that his position and his access to Confidential Information makes it necessary
for the Company to restrict his post-employment activities.  Haddrill represents and warrants that the
knowledge, ability and skill he currently possesses are sufficient to enable
him to earn a livelihood satisfactory to him for a period of one (1) or two (2)
years, depending on the identity of his future employer, in the event that his
employment with the Company terminates, without violating any restriction in
this Agreement.  If, however, any of the
restrictions set forth in paragraphs 10, 11, 12 or 13 are held invalid by a
court by reason of length of time, geographic reach, activity covered or any or
all of them, then such restriction or restrictions shall be reduced only by the
minimum extent necessary to cure such invalidity.


 


15.                                 Remedies.  Haddrill agrees that if he should breach or
threaten a breach of any of the covenants contained in paragraphs 10, 11, 12,
13 or 16 irreparable damage would occur to the Company and that damages arising
out of such breach or threatened breach may be difficult to determine.  Haddrill therefore further agrees that in
addition to all other remedies provided at law or at equity, the Company shall
be entitled as a matter of course to specific performance and temporary and
permanent injunction relief from any court of competent jurisdiction to prevent
any further breach or threatened breach of any such covenant by Haddrill, his
employers, employees, partners, agents or other associates, or any of them,
without the necessity of proving actual damage to the Company by reason of any
such breach or threatened breach and without


 


9

















 


the necessity of posting security or a bond.  If the Company prevails in any suit claiming breach or threatened
breach of paragraphs 10, 11, 12, 13 or 16 of this Agreement, Haddrill shall
reimburse the Company for its expenses incurred in connection with such a suit,
including without limitation, its attorneys’ fees and costs.  For purposes of this paragraph, the Company
will be considered to have “prevailed” if it is determined that Haddrill breached
or threatened to breach any covenant in those paragraphs (or any covenant in
those paragraphs that is modified as provided in paragraph 14).


 


16.                                 Non-Disparagement.  Each of Haddrill and the Company agrees that
during the term of this Agreement and for a period of three (3) years following
any applicable termination date, neither Haddrill nor the Company shall,
publicly or privately, disparage or make any statements (written or oral) that
could impugn the integrity, acumen (business or otherwise), ethics or business
practices, of the Company or Haddrill, as the case may be, except, in each
case, to the extent (but solely to the extent) (i) necessary in any judicial or
arbitral action to enforce the provisions of this Agreement or (ii) in
connection with any judicial, regulatory or administrative proceeding to the
extent required by applicable laws.  For
purposes of this paragraph 16, references to the Company include its officers,
directors, employees, consultants and shareholders (which are reasonably known
as such to Haddrill) on the date hereof and hereafter.


 


17.                                 Cooperation.  At all times during the term of this
Agreement and thereafter, Haddrill will reasonably cooperate with the Company
(and vice versa) in any litigation or administrative proceedings involving any
matters with which Haddrill was involved during his employment by the
Company.  The Company will reimburse
Haddrill for his reasonable out-of-pocket expenses, if any, incurred in
providing such assistance, including reasonable attorneys’ fees.


 


18.                                 Previous Employment.  Haddrill represents and warrants that he is
not under any legal restraint or restriction that would prevent or make
unlawful his execution of this Agreement or his performance of the obligations
under this Agreement and that Haddrill has disclosed to the Company any and all
restraints, confidentiality commitments or employment restrictions that
Haddrill has with any other employer or organization.  Haddrill shall use his best efforts to assure that Manhattan
Associates, Inc. will keep confidential and not disclose publicly any
information relating to Haddrill’s employment hereunder prior to a public
announcement regarding such employment by the Company without the prior written
consent of the Company.


 


19.                                 Licenses and
Approvals.  Each party shall (a) use
its or his commercially reasonable efforts to apply for (and diligently
prosecute such applications) all necessary or appropriate licenses and
approvals from applicable gaming authorities in conjunction with this Agreement
and the obligations of the parties hereunder and (b) diligently cooperate with
any requests, inquiries or investigations of such regulatory authorities.  Such actions shall be undertaken at the
expense of the Company.


 


20.                                 Assignment.  Neither the Company nor Haddrill shall have
the right to assign this Agreement or any obligation hereunder without the
written consent of the other, except that the Company may assign this Agreement
to a successor or assignee in connection with a merger, consolidation or sale
or transfer of all or substantially all of the assets of the Company.


 


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21.                                 Indulgences.  The failure of any party hereto at any time
or times to enforce its rights under this Agreement strictly in accordance with
the same shall not be construed as having created a custom in any way or manner
contrary to the specific provisions of this Agreement or as having in any way
or manner modified or waived the same.


 


22.                                 Notices.  Any notice required or permitted to be given
by this Agreement shall be in writing and shall be sufficiently given to the
parties if delivered in person or sent by United States registered or certified
mail or nationally recognized overnight courier (return receipt requested) or
by telefax (with evidence of successful transmission) addressed to the
receptive parties at the following addresses or at such other addresses as may
from time to time be designated in writing by the parties:


 


	
  If to Haddrill:

  	
   

  	
  If to the Company:

  
	
   

  	
   

  	
   

  
	
  Richard Haddrill

  3394 Knollwood Drive

  Atlanta, Georgia  30305

  	
   

  	
  Alliance Gaming Corporation

  6601 South Bermuda Road

  Las Vegas, Nevada 89119

  Attention:  General Counsel

  

  Telefax Number:  702-270-7699

  

  Copy to:

  Kevin Verner

  885 Island Park Drive

  Charleston, SC  29492

  



 


23.                                 Controlling Law and
Dispute Resolution.  This Agreement
shall be construed and applied in accordance with the laws of the State of
Nevada without giving effect to the principles of conflicts of law under Nevada
law.  The parties agree to submit to the
jurisdiction and venue of the state and federal courts located in Nevada in the
event that there is any claim that this Agreement has been breached.


 


24.                                 Entire Agreement.  This Agreement sets forth the entire
agreement between the parties with respect to the matters covered herein, and
supersedes all other agreements and understandings.  No waiver or amendment to this Agreement shall be effective
unless reduced to writing and executed by the parties hereto.


 


25.                                 Understanding of
Haddrill.  Haddrill agrees and
acknowledges that he has read this Agreement in its entirety, that he has had
the opportunity to review it with legal counsel of his own choosing, that he
understands it and that he enters into it voluntarily.


 


[Signatures on following
page.]


 


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IN WITNESS
WHEREOF, this Agreement has been duly executed by and on behalf of the parties
hereto as of the day and year first above written.


 


	
   

  	
  ALLIANCE GAMING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 
  RICHARD HADDRILL

  
	
   

  	
  Date:

  



 


 


496502.5


 


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SCHEDULE A


 


PERFORMANCE STOCK OPTIONS


 


1.  Haddrill shall be issued non-statutory stock
options (“Options”) to purchase 500,000 shares of Company common stock under
the Company’s 2001 Long Term Incentive Plan exercisable at $17.16 per share.


 


2.  Options shall become exercisable on October
1, 2012 and shall remain exercisable until October 1, 2014, at which time any
unexercised Options shall expire; provided that Haddrill is an employee on
October 1, 2012.


 


3.  Once Options become exercisable hereunder,
they shall remain exercisable until October 1, 2014 without regard to whether
Haddrill continues to be employed by the Company prior to or on such date.


 


4.  Options shall become exercisable earlier
than October 1, 2012 as follows:


 


(a)                                  One
twelfth (1/12) of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value (as hereinafter defined) of the
Company’s common stock is at least $30.00 and (ii) October 1, 2005, but only if
the Fair Market Value of the Company’s common stock is at least $30.00 on or
before October 1, 2007.


 


(b)                                 An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $35.00 and (ii) October 1, 2005, but only if the Fair
Market Value of the Company’s common stock is at least $35.00 on or before
October 1, 2007.


 


(c)                                  An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $40.00 and (ii) October 1, 2005, but only if the Fair
Market Value of the Company’s common stock is at least $40.00 on or before
October 1, 2008.


 


(d)                                 An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $45.00 and (ii) October 1, 2005, but only if (x) the
Fair Market Value of the Company’s common stock is at least $45.00 on or before
October 1, 2008 or (y) the Fair Market Value of the Company’s common stock is
at least $40.00 on or before October 1, 2008 and at least $45.00 on or before
October 1, 2009.


 


(e)                                  An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $30.00 and (ii) October 1, 2006, but only if the Fair
Market Value of the Company’s common stock is at least $30.00 on or before
October 1, 2007.


 


(f)                                    An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock


 


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is at least $35.00 and (ii) October 1, 2006, but only if the Fair
Market Value of the Company’s common stock is at least $35.00 on or before
October 1, 2007.


 


(g)                                 An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $40.00 and (ii) October 1, 2006, but only if the Fair
Market Value of the Company’s common stock is at least $40.00 on or before
October 1, 2008.


 


(h)                                 An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $45.00 and (ii) October 1, 2006, but only if (x) the
Fair Market Value of the Company’s common stock is at least $45.00 on or before
October 1, 2008 or (y) the Fair Market Value of the Company’s common stock
is at least $40.00 on or before October 1, 2008 and at least $45.00 on or before
October 1, 2009.


 


(i)                                     An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $30.00 and (ii) October 1, 2007, but only if the Fair
Market Value of the Company’s common stock is at least $30.00 on or before
October 1, 2007.


 


(j)                                     An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $35.00 and (ii) October 1, 2007, but only if the Fair
Market Value of the Company’s common stock is at least $35.00 on or before
October 1, 2007


 


(k)                                  An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $40.00 and (ii) October 1, 2007, but only if the Fair
Market Value of the Company’s common stock is at least $40.00 on or before
October 1, 2008.


 


(l)                                     An
additional one-twelfth (1/12) of such Options shall become exercisable on the
later of (i) the first date on which the Fair Market Value of the Company’s
common stock is at least $45.00 and (ii) October 1, 2007, but only if (x) the
Fair Market Value of the Company’s common stock is at least $45.00 on or before
October 1, 2008 or (y) the Fair Market Value of the Company’s common stock is
at least $40.00 on or before October 1, 2008 and at least $45.00 on or before
October 1, 2009.


 


5.                                       For
purposes of this Schedule, the term “Fair Market Value” with respect to the
Company’s common stock as of a particular date shall mean the average per share
closing price of the Company’s common stock on the stock exchange on which the
stock is principally traded for the 20 business days immediately prior to such
date.


 


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SCHEDULE B


 


RESTRICTED STOCK UNITS


 


1.  The Company shall issue to Haddrill 377,030
Restricted Stock Units (“RSUs”) under the Company’s 2001 Long Term Incentive
Plan.  The number of RSUs was determined
by dividing $6.5 million by the average per share closing price of the
Company’s common stock on the stock exchange in which the stock is principally
traded for the 20 business days immediately prior to the date of the grant or
such other method as the parties shall mutually agree to, provided that such
method complies with the Plan.


 


2.  Except as provided in the Agreement, the
RSUs will vest in one-third equal installments on each of October 1, 2005,
October 1, 2006 and October 1, 2007, if Haddrill is continuously employed by
the Company as CEO until each such respective vesting date.


 


3.  Each vested RSU represents Haddrill’s right
to receive one (1) share of Company stock, as follows:


 


a.                                       75%
of the shares represented by the vested RSUs shall be issued to Haddrill (1) on
the later of [a] October 1, 2007 or [b] the first date on which such payment or
any portion thereof is no longer subject to the limits of section 162(m) of the
Internal Revenue Code in which case that portion of the payment that is no
longer subject to such limits shall be issued to Haddrill at the time such
limits become inapplicable, or (2) in the event that this Agreement is
terminated, on the first date in which such payment or any portion thereof is
no longer subject to the limits of Section 162(m) of the Internal Revenue Code
in which case that portion of the payment that is no longer subject to such
limits shall be issued to Haddrill at the time such limits become inapplicable.


 


b.                                      The
remaining 25% of the shares represented by the vested RSUs shall be issued to
Haddrill (1) on the later of [a] October 1, 2008 or [b] the first date on which
such payment or any portion thereof is no longer subject to the limits of
section 162(m) of the Internal Revenue Code in which case that portion of the
payment that is no longer subject to such limits shall be issued to Haddrill at
the time such limits become inapplicable, or (2) in the event that this
Agreement is terminated, on the first date in which such payment or any portion
thereof is no longer subject to the limits of Section 162(m) of the Internal
Revenue Code in which case that portion of the payment that is no longer
subject to such limits shall be issued to Haddrill at the time such limits become
inapplicable.


 


c.                                       Notwithstanding
anything herein to the contrary, if the vesting of any RSUs pursuant to
paragraph 2 of this Schedule B shall be taxable to Haddrill prior to the date
on which Haddrill is otherwise entitled to receive shares of the Company’s
stock pursuant to this paragraph 3 with respect to such RSUs, then the Company
shall promptly upon request issue to Haddrill all of the shares represented by
such RSUs that have become taxable, which shares shall be freely transferable
by Haddrill subject only to any applicable securities laws.


 


4.  Except as provided in the Agreement, if
Haddrill ceases to be the CEO, all nonvested RSUs shall be immediately
forfeited.


 


15